Innovation (noun): The act or process of changing or introducing something new into what’s already been established.
Companies like Airbnb, Amazon, and Uber immediately come to mind when talking about innovation.
These businesses took an already established process – like buying groceries, hailing a taxi, and booking a hotel room – and added a more convenient and efficient spin to it.
Maybe you’re not looking to become the Uber, Airbnb, or Amazon of your industry – at least not yet. Perhaps solving a real problem for target customers is your focus right now.
But if you’re running a business…
You must innovate.
Science Says Innovation Is Essential To Business Survival
One may dismiss innovation as another business buzzword, one that sounds important but ultimately have no meaning.
But research says otherwise.
In a study which analyzed 61,177 firms listed on the Business Register and the Central Bureau of Statistics Netherlands, researchers Elena Cefis and Orietta Marsili found that innovation has a “positive and significant effect on firms’ survival” and this effect increases as time goes.
And take note:
The positive impact of innovation is felt more by small businesses and startups.
Innovative small and medium-sized businesses are 3% more likely to survive while young companies increase their rate by 6% more than than their non-innovative counterparts.
The figures may not look much. But in a massive study such as the above, one percent is statistically significant!
Even age-old industries rely on innovation to stay afloat and thrive.
Take the vending and self-service industry for example. In the US, vendos generate $7 billion in annual revenue while intelligent vending machines are expected to reach $11.84 billion by 2025. Steady growth wouldn’t have been possible without innovation.
These machines are already built for buying and dispensing goods with ease. But vending machine technology didn’t stop evolving and eventually incorporated cashless payments systems with credit cards and smartphones for even greater convenience.
By adapting with the changing times, vending machines with cashless systems generated more high-ticket transactions and increased total sales growth.
You see, when you innovate, you don’t just create something fancy or shiny. But you improve your business and its offerings.
Your company becomes more efficient. Customers dig the improved product or service you provide. And everyone is happy as a clam.
In simpler words…
To innovate is good business practice.
But How Does One Innovate? 3 Starting Points To Consider
Saying that innovation is good for your company is one thing. But putting the concept to practice is much harder. While a step-by-step workbook for the subject doesn’t exist, we can look at the common ground between today’s most disruptive companies.
Here are three starting points to consider.
Start With The Customer
Not all innovations are equal. If you’re going to innovate, you must do so in a way that benefits the people who buy and support your products or services.
Your company already has a mission and vision statement. And if your company is embodying those statements, customers are expecting you to keep up. If an innovative idea is not in line with the business’ values, vision, and customer expectations, look somewhere else.
Or, better yet, start with your products and customer-facing parts of your business and ask:
- How can we improve?
- What problems are my customers complaining about?
- And what will my customers need but don’t know just yet?
Remember, we can’t talk business without customers. So put them first!
Encourage Problem-Solving, Not Just Ideas
Ideas are good. But solutions are infinitely better!
When trying to get the entire organization to innovate, you want to encourage not just ideas but ideas that solve problems.
One good way to do this is to use a Kaizen box.
Kaizen is a Japanese business and management philosophy for continuous improvement. A kaizen box, on the other hand, contains suggestions from the entire workforce – from the CEO all the way to the entry-level employees.
What made the entries in a kaizen box different from a suggestion box is their focus on problem-solving. Instead of containing just ideas, an entry into a kaizen box lists:
- A clear description of the problem and its impact
- A proposed solution
- And expected outcome after applying the solution
From here, you can sort the entries into four categories:
- Low effort and high impact
- High effort and high impact
- Low effort and low impact
- High effort and low impact
As you may have guessed, you want to focus on the “low effort and high impact” solutions before moving onto the next categories.
A minor innovation on its own may not contribute much to your business’ efficiency and bottom-line. But when they add up, they can deliver major benefits to a company.
Look Beyond Products And Services
The natural tendency when discussing innovation is to look at improving the company’s offerings. While doing so is an excellent step in the right direction, know that not such an approach is not applicable to every industry.
For example:
A mobile game developer have a lot of room for innovation – from streamlining code, balance fixes, to adding immersive game elements.
On the other hand, a pet care service provider will offer the pretty much the same thing. Sure, the business can innovate its offer (ex: home visits). But these changes are likely to come with disruptions to the company’s usual operations.
However, the same pet care service provider can innovate other parts of their business – like their marketing, accounting, retention, and more.
Again, innovation is all about taking something that’s already established and making it better.
And if you look around your startup, you will find a lot of things that are more or less established such as your mission-critical processes. And they’re good targets for innovation.
The changes may not reflect on the end-product. But if they solve a problem, help you serve your customers better, and are in line with your startup’s vision, you’re on the right track!
